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IRS Releases Guidance on Clean Vehicle Credits

Friday, January 06, 2023 9:00 AM | Anonymous member (Administrator)

The IRS has released the following information and guidance on Clean Vehicle Credits:

IR-2022-231: IRS releases frequently asked questions about clean vehicles credits for new, previously owned and commercial clean vehicles

FS-2022-42: Frequently asked questions related to new, previously-owned and qualified commercial clean vehicle credits

IR-2022-232: Treasury, IRS issue guidance on their intent to publish regulations regarding clean vehicles

Notice 2023-1: informs taxpayers that the Department of the Treasury and the Internal Revenue Service (IRS) intend to propose regulations addressing the definitions of certain terms in respect of the credit available under section 30D of the Code, and lays out the expected content of those regulations. The proposed regulations will include definitions of the following terms, which are relevant for new clean vehicles placed in service after December 31, 2022:

  1. Final Assembly;
  2. North America;
  3. Manufacturer’s Suggested Retail Price;
  4. Classifications for categories of vehicles, including vans, sport utility vehicles, pickup trucks, and other vehicles; and
  5. Placed in service.

Notice 2023-9 will be in IRB: 2023-3, dated January 17, 2023.

IR-2022-233: Treasury, IRS issue guidance on the incremental cost for the Commercial Clean Vehicle Credit

Notice 2023-9: informs taxpayers that based on analysis by the Department of Energy of representative qualified commercial clean vehicles and comparable internal combustion engine vehicles, the Department of the Treasury and the Internal Revenue Service (IRS) have reviewed the incremental cost for all street vehicles in calendar year 2023. This analysis shows that the incremental cost of all street vehicles (other than in the case of compact car PHEVs) that have a gross vehicle weight rating of less than 14,000 pounds will be greater than $7,500 in calendar year 2023. Accordingly, the incremental cost will not limit the available credit amount under § 45W for street vehicles (other than compact car PHEVs) that have a gross vehicle weight rating of less than 14,000 pounds and are placed in service in calendar year 2023. 

For compact car PHEVs for which the incremental cost was calculated to be less than $7,500, the Treasury Department and the IRS will accept for vehicles placed in service during calendar year 2023 a taxpayer’s use of the incremental cost published by the DOE in calculating the § 45W credit amount.  In addition, this analysis provides an incremental cost for several different classes of street vehicles with a gross vehicle weight rating of 14,000 pounds or more in calendar year 2023. The IRS will accept a taxpayer’s reliance on the incremental cost published by the Department of Energy for the appropriate class of street vehicle. 

NADA has also released the following:

A new NADA Regulatory Affairs alternative fuel vehicle and refueling incentive webpage focuses on the Inflation Reduction Act text credits for clean vehicles and refueling infrastructure that start to kick in as of January 1, 2023. The webpage contains sample Seller Report forms and a link to a recordingof NADA’s December 27 Webinar on these tax credits. Dealers should also review important new IRS information on these credits and look out for brand-specific EV tax credit communications from their OEMs.

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